Huntington-Cleveland Requests Agency Action on Skyline Mine Permit

According to the request for agency action, “[t]he [a]ddition will allow Canyon Fuel to modify its mine plan to include Flat Canyon Federal Coal Lease Tract UTU-7714 as part of its existing Surface Mining Control and Reclamation Act permit.” Huntington-Cleveland says that its request for agency action was filed in order to seek “a hearing before the Board of Oil, Gas and Mining … on the Division’s approval of the Permit and the hydrologic and water conditions imposed by the Division,” as well as a request that “the Board modify the Permit,” or “remand the Permit back to the Division for further proceedings with Canyon Fuel and Huntington-Cleveland to develop sufficient conditions to minimize impacts to the hydrologic balance.”

Hearing Held to Determine Fate of Skyline Mine Permit

A hearing on the request for agency action took place on April 26, 2017 at 10:00 am. As set forth in the notice of hearing, the purpose of the hearing will be to address the request for an Order:

Modifying the Permit issued for the Flat Iron Addition to the Skyline Mine to require:

A) Automated continuous or daily monitoring of flows into Electric Lake and the connection of such monitoring sites to Emery County’s ExacTraq system consistent with the Loughlin Report’s recommendations; and B) Imposing conditions and limitations to require the discharge of water pumped from the mine to Electric Lake rather than Eccles Creek, except in emergencies and situations in which Electric Lake is at capacity; or

In the alternative, vacate the decision approving the Permit for the Flat Iron Addition, and remand the matter to the Division with instructions for the Division to work with Canyon Fuel and Huntington-Cleveland to develop sufficient conditions to minimize disturbances to hydrologic balance;

Making such findings and orders in connection with this Request as it deems necessary; and

Providing for such other and further relief as may be just and equitable under the circumstances.

Huntington-Cleveland Holds Senior Water Rights Dating Back to 1885

Huntington-Cleveland is the rightful holder of several state-appropriated water rights, including the most senior water right in the Huntington drainage, which dates back to 1885. Huntington-Cleveland states that it relies on its state-appropriated water rights “to provide water for its many shareholders, which include nearly all of the agricultural users in northern Emery County as well as the municipalities of Huntington, Cleveland, and Elmo for culinary drinking water.” Huntington-Cleveland says it also “provides water for PacifiCorp/Rocky Mountain Power, its largest shareholder, for the operation of the Huntington Power Plant, a major employer and economic driver in Emery County.”

According to Huntington-Cleveland, the water in the Huntington drainage is collected and stored in the Boulger Reservoir. The Boulger Reservoir is located within the Huntington drainage and the Flat Canyon Lease Addition for the Skyline Mine. The water is used to fulfill Huntington-Cleveland’s water rights appropriated by the state. Huntington-Cleveland says that other nearby reservoirs also supply water to Huntington Cleveland. “Huntington-Cleveland believes these water sources are hydrologically located to other water sources located within the [Flat Canyon Lease Addition for the Skyline Mine] and Huntington Creek.

Skyline Mine Begins Flooding in 2001

In August 2001, part of the Skyline Mine was unexpectedly flooded while mining operations were underway in the mine. Consequently, Electric Lake, which Huntington-Cleveland claims supplies it with water, began to drain. In response to the lake losing water, Huntington-Cleveland says Canyon Fuel and PacifiCorp, which own Electric Lake, drilled three separate wells in James Canyon for the purpose of pumping water into Electric Lake. Huntington-Cleveland says that of the three wells drilled, only one continues to pump water to this day, and that, between October 2015 and March 2016, the pump pumped nearly 13,700,000 gallons of water per day. In all, as of March 2016, Huntington-Cleveland believes that the pump has pumped some 79,000 acre-feet of water from the mine, and that the amount of water being pumped from the mine is only increasing over time.

Following the unexpected flooding of the Skyline Mine in 2001, certain tests were conducted to determine the source of the flooding. These tests revealed “(a) faults at the bottom of the lake adjacent to the mine workings; (b) bubbles from methane gas, a well-known feature of coal formations, emanating along the faults; and (c) sediment being sucked downward into the ground as the vehicle stirred up sediment at the bottom of the lake,” Huntington-Cleveland says. Various other studies that were completed at the same time revealed “substantial quantities of surface water in the vicinity of Electric Lake [that] were being diverted in the mine.” However, other studies reached differing conclusions, and, as a result, there is consensus regarding the source of the water that continues to flood the mine. Huntington-Cleveland worries that the mining of the Flat Canyon Lease Addition for the Skyline Mine will only increase flooding into the mine, which will run parallel to the western shore of the Electric Lake.

Canyon Fuel Seeks to Broaden its Mining Operations in 2015

In October 2015, Canyon Fuel filed an application to broaden its mining operations into the Flat Canyon Lease Addition for the Skyline Mine. In response, Huntington-Cleveland requested an informal conference to discuss the application, as well as its concerns that the “required sufficient hydrological protections to ensure that the expanded mining operations would not upset the hydrologic balance as required by Utah law and the Division’s regulations and impair its water rights.” Following an informal conference in July 2016, the division retained the services of Loughlin Water Associates, LLC to independently evaluate whether Canyon Fuel’s proposed monitoring was sufficient to detect the potential impact on water rights.

Loughlin ultimately determined that Canyon Fuel’s plan was not “adequate … to prevent impacts to … water rights and Electric Lake.” As a result, Loughlin recommend to the division that Canyon Fuel put in place additional monitoring and data protocols to detect the loss of water from Electric Lake.

Following Loughlin’s report, Canyon Fuel resubmitted its application to the division, which included several changes, but did not include a plan to monitor Huntington Creek or other significant sources of inflows into Electric Lake or Huntington Creek. Instead, Canyon Fuel’s plan relied on quarterly reporting. Huntington-Cleveland also says that Canyon Fuel’s monitoring plan as set forth in its application “relied on monitoring to address the potential water rights impacts of its trans-basin diversion of water pumped in the mine into the Price River Drainage, rather than including limitations or conditions on the out-of-basin discharge of this water.”

Canyon Fuel Issued Permit to Expand Mining Operations

In early February 2017, the division issued its approval of Canyon Fuel’s application and issued Canyon Fuel its permit to expand its mining operations into the Flat Canyon Lease Addition for the Skyline Mine. As set forth by Huntington-Cleveland in their request for agency action and hearing:

Although the Division included a condition that required Canyon Fuel to submit cumulative monthly flow data for discharges into Electric Lake and Eccles Creek, it did not require automated continuous or daily monitoring as Loughlin recommended. Most importantly, the Division also did not limit or condition the discharge of water pumped from the mine into the Price River Drainage.

Huntington-Cleveland Appeals

In response to the decision to issue the permit, Huntington-Cleveland filed its appeal and request for agency action and hearing. In its request, Huntington-Cleveland made several arguments regarding why the permit should be modified, or in the alternative, why the matter should be remanded back to the division for further proceedings. First, Huntington-Cleveland argued that the division erred by failing to require automated continuous or daily monitoring of the inflows into Electric Lake as recommended by Loughlin. According to Huntington-Cleveland, the division is authorized under its own rules and regulations to require the monitoring suggested by Loughlin. Huntington-Cleveland says the division’s “failure to exercise [its] authority and require conditions that its own independent expert recommended is arbitrary, capricious, and contrary to its obligation to minimize the impacts of Canyon Fuel’s coal mining activities to the hydrologic balance.”

Second, Huntington-Cleveland argued that the division failed to put in place sufficient protections as it relates to the trans-basin diversion of water from the Huntington Drainage into the Price River Drainage. In the eyes of Huntington-Cleveland, the division is “obligated by law to and should have imposed conditions that limit and regulate the amount of water discharged into Eccles Creek. More specifically, the Division should have required Canyon Fuel to discharge as much of the waters pumped from the mine as possible into Electric Lake, and allowed discharges to Eccles Creek only in emergencies or situations in which Electric Lake is at full capacity.”

Finally, Huntington-Cleveland argued that it is entitled to protections that minimize any impairment to its state-appropriated water rights. In its request, Huntington-Cleveland sets forth:

As the Loughlin Report notes, the closer proximity of the Addition to Electric Lake heightens the concerns of water right impairment and necessitates steps to expand the Application “to protect water rights and to show that no impacts to Electric Lake are occurring in the future.” Moreover, common sense and Utah law as discussed above dictates that one cannot divert millions of gallons of water a day and thousands of acre-feet per year from a closed basin without some impairment. Under Utah law it is the burden of the applicant to demonstrate otherwise. Therefore, the Division does not need to wait until Huntington-Cleveland has collected detailed flow measurements quantifying impairment to its water rights to enact the Loughlin Report’s recommendations regarding automated continuous or daily flow monitoring and to require conditions and restrictions on trans-basin diversions to minimize impacts to the hydrologic balance and Huntington-Cleveland’s water rights.

Mining Rights v. Water Rights

It will be interesting to see whether or not the Oil, Gas and Mining Board grants Huntington-Cleveland’s request to modify the permit it issued, or whether, in the alternative, the permit is remanded back to the division for further consideration. Furthermore, the dispute between the mine and Huntington-Cleveland will serve as a case study in mining rights v. water rights in the newly dawned Trump era. We will continue to follow this story, and will provide further updates as they become available.